Nicholas Schorsch's RCS Capital (RCAP) announced it will buy Cole Capital from sister company American Realty Capital Properties for $700 million, so Cole can use the company’s wholesale broker/dealer and expand RCAP’s distribution platform. ARCP will act as sub-advisor to Cole’s non-traded net lease REITs. RCAP's stock was up 7 percent as of 12:30 p.m. eastern time on the news.
In October 2013, American Realty Capital and Cole Real Estate Investments agreed to merge in a $11.2 billion deal. Under the terms of the deal, Cole became a wholly owned subsidiary of ARCP.
RCAP will pay $200 million in cash, $300 million in seller debt and $200 million in common stock for Cole. The firm expects the deal to add $0.51 a share to 2015 adjusted net income.
With the acquisition, RCAP will add seven funds to its platform, including Cole Corporate Income Trust (CCIT), Cole Credit Property Trust IV (CCPT IV), Cole Office & Industrial REIT (CCIT II), Cole Credit Property Trust V (CCPT V), Cole Real Estate Income Strategy (Daily NAV) and two future programs, Cole Credit Property Trust VI (CCPT VI) and Cole Office & Industrial REIT (CCIT III).
RCAP also believes the acquisition will increase equity capital raised through its wholesale broker/dealer Realty Capital Securities.
The move also grows the firm’s asset management business, which includes Strategic Capital and Hatteras Funds. The combined asset management segment creates nearly $100 million of annual EBITDA.
Schorsch, executive chairman of RCS Capital (RCAP), jumped into the independent broker/dealer space with his purchase of First Allied Securities and The Legend Group, with 1,500 advisors, in June 2013. But since then, Schorsch has been on an acquisition tear, shocking the industry with the number of deals he’s penned. Today, his empire consists of 11 broker/dealers and 9,700 advisors, Girard Securities being the most recent acquisition.